Airlines welcome CAA review into Heathrow regulations as third runway debate intensifies 

A review of regulations covering Heathrow will take place by the aviation regulator after the government backed the airport’s multi-billion pound third runway expansion proposal.

 

A working paper for consultation on Heathrow’s regulatory model was published by the Civil Aviation Authority, which also "explores whether an alternative model for capacity expansion could better serve the interests of consumers using the airport”.

 

The disclosure was welcomed by airlines amid concerns that costs could spiral alongside the project.

 

The list of potential new models has been developed based on submissions from stakeholders, including both Heathrow and Heathrow Reimagined - the industry coalition including Arora Group which put forward a proposal for a cheaper, shorter third runway - and “exploring regulatory models used across other industries and internationally”, according to the CAA. 

 

A recommendation for the regulatory model to be applied at Heathrow is expected to emerge in spring 2026 once industry responses to the working paper have been assessed. 

 

The paper out for consultation points out that charges are likely to rise from £24.28 to £33.26 under the current two runway configuration.

 

But it adds that ”airport charges could increase significantly beyond this level in the context of major capacity expansion at Heathrow. 

 

"An increase in charges of this magnitude (either under the two-runway configuration or with expansion) are likely to result in HAL’s [Heathrow Airport Limited] charges significantly exceeding current charges at other airports even after controlling for other relevant factors.”

 

It also points out that Heathrow’s charges “appear high compared to other airports that are subject to a greater degree of competition. 

 

“There are factors over which HAL has relatively little control that partly, but do not fully, explain the charge gap between HAL and other airports.”

 

The authority’s consumer and markets group director Selina Chadha said: “We recognise the importance of the efficient and effective expansion of capacity at Heathrow airport to the wider economy, airlines and consumers, and welcome the Government’s support of our review.

 

“We are seeking to develop the regulatory framework to both deliver the best outcomes for consumers and support the government’s timetable for the delivery of expansion.”

 

A spokesperson for Heathrow Reimagined, which also includes British Airways owner IAG, Virgin Atlantic, American Airlines and Amex GBT,  said: “It is now critical that expansion is delivered affordably, with a regulatory model that effectively controls Heathrow’s capital efficiency and delivers competition to improve value for money for consumers and businesses.

 

“We welcome the CAA’s finding that there is sufficient evidence to revisit Heathrow’s current regulatory framework. 

 

“The regulator’s review creates a much-needed opportunity to reimagine the flawed model and deliver reform. 

 

“A new approach can create a global hub fit for the future, driving economic growth. Fundamental reform is essential to ensure that costs don’t rise further, and that the benefits to UK plc are delivered in full.”

 

A Virgin Atlantic spokesperson said: “Ahead of the Budget, the government has taken an important next step to confirm the northwest runway as its preferred expansion scheme. 

 

“As a UK flag carrier, Virgin Atlantic has been supportive of growth at Heathrow if, and only if, there is fundamental reform to the flawed regulatory model to ensure an affordable scheme for consumers.

 

“Therefore, we welcome the CAA’s important consultation and broader review to examine Heathrow’s current regulatory model and consider alternative approaches. 

 

“Competition is one of the best ways to ensure capital efficiency and deliver value for money from this huge project.”

 

Business Travel Association chief executive Clive Wratten said that “choosing how we expand matters just as much as choosing whether to expand”. 

 

He added: "The business travel community needs a solution that delivers capacity at pace, enhances resilience, and keeps costs under control for airlines and passengers alike.

 

"The government’s expansion is sound in principle, but it is vital that the chosen proposal delivers value, minimises disruption, and avoids burdening businesses with higher travel costs. 

 

"Businesses cannot absorb another decade of uncertainty around this. Timely delivery is essential if the UK is to compete with global hubs that already offer greater runway capacity and reliability.”

 

Heathrow insists that its expansion proposal costs £33 billion – including £21 billion for the third runway, £12 billion for associated terminal infrastructure. An additional £15 billion on modernising and upgrading current facilities will go ahead independent of an additional runway.

 

A Heathrow spokesperson said: “Expanding Heathrow will mean more connectivity, increased trade, improved passenger experience and a huge economic boost for the British businesses that will help design and build it. 

 

“However, we still need further clarity as to how the crucial next phase of the project will be regulated. 

 

“We need definitive decisions from the CAA and government by mid-December so that delay to the project can be avoided and we can get on with delivering this vital project for our customers and for the UK.” 

 

Confirming the Heathrow scheme as being “the most credible and deliverable option”, transport secretary Heidi Alexander said: “The government’s position is clear: expansion at Heathrow must be cost effective, minimising the burden on passengers and coming at no cost to the taxpayer. 

 

“The project will be privately financed, including the core scheme and any associated surface access improvements.”